Radio One continues rebound with profitable quarter

Radio One posted its second consecutive profitable quarter Thursday, sending the broadcaster's shares up sharply and signaling a possible turnaround in the local media business.

The Lanham company said it earned $14.2 million (25 cents a share) in the third quarter, compared with a loss of $266.1 million ($2.81) a year earlier. The results for the year-ago period were affected by a one-time write-down of $337.9 million on the value of its broadcasting licenses.

Shares of Radio One jumped more than 27 percent on the news, gaining 39 cents to close at $1.83.

"It's a pretty decent result," said industry analyst Mark R. Fratrik of BIA Financial. "They are moving in the right direction. But like every other radio company, there are both long-term and short-term challenges."

Founded in 1980, Radio One owns and operates 53 radio stations across the United States aimed at African American and urban listeners. The company has struggled in recent years, and the recession has magnified its difficulties.

However, this summer, Radio One ended a six-quarter losing streak by reporting a $7.2 million profit for the April-through-June period, as it reduced operating expenses.

In the third quarter, the company said that revenue fell 12 percent, to $75.5 million, but that it saw continued signs of improvement in the radio market. Ad revenue from the food and beverage, retail and health-care sectors was down less than 5 percent compared with a year ago, but automotive and financial sector revenue dropped 37.6 percent and 22.9 percent, respectively.

The impact of those sales declines was muted by continued cuts in operating expenses. Radio One chief executive Alfred C. Liggins III called the results "mixed."

"The sequential improvement in radio revenue that we have been seeing since Q1 continued, but not as strongly as I would have liked," Liggins said in a statement Thursday. "While certain of our larger categories are showing signs of recovery, others continue to display significant weakness."

While the recession appears to be easing its grip, the radio industry still faces long-term competition for listeners with other audio devices, online streaming, iPods and satellite radio. It also competes with the Internet and cable TV for a greater share of local advertising dollars.

"The negative numbers are getting smaller as we progress through 2009," Fratrik said. "The rest of the industry will also be showing that type of lower negative number as the economy starts to rebound."